May 5, 2025 • 53 mins
Bloomberg’s Caroline Hyde discusses the drop in media stocks following President Trump’s proposal to impose 100% tariffs on foreign-produced movies. Treasury Secretary Scott Bessent, speaking from the Milken Institute Global Conference, says the US must win the race to develop artificial intelligence as China closes the gap. Daniel Morgan, Senior Portfolio Manager at Synovus Trust, explains what's behind the market dip after a four-day rally.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:34):
Live from New York and Caroline Hyde and this is
Bloomberg Technology coming up markets. They are on edge as
trade concerns holt the four day winning street for tech stocks.
This as President Trump announces plans to impose one hundred
percent tariffs of films produced overseas, slamming media companies and Microsoft,
surpassing Apple becoming the largest US company by market value.
(00:56):
And in just a few minutes, Treasury Secretary Scott best
And will be speaking from the Milking Conference in Los Angeles.
Speaker 3 (01:03):
We'll bring you that.
Speaker 2 (01:03):
Conversation live as it gets underway. The President Trump is
taking aim at the movie industry and announcing plans to
impose check this out, one hundred percent tariff on films
produced overseas. Now is all in a post on truth
social adding quote, we want movies made in America again.
Bloommeg's Tyler Kennell joins us Now for more details and
in fact, movie moguls in the industry went to the
(01:25):
President saying we want movies made in the US with
tax credits, he proposes something very different.
Speaker 4 (01:31):
Yeah, hey, Caroline. While President Trump has often taken the
stick verse cared approach, saying no to those subsidies and
incentives instead of yes to his tariff plans. As you
alluded to there, Bloomberg News reporting that John Voight and
his agent met with President Trump at Mara a Lago
over the weekend and asked him to put forward some
tax excentives, including expanding a current tax credit that would
help boost production in the US. But there's still now
(01:54):
that he is pursuing this tariff route. There's a lot
of big questions here, including how will a movie actually
be valued for tariff purposes. Movies are, of course, more
of a service instead of a good. Not to mention
that one film could be produced in multiple locations. Does
this extend to foreign based production companies or US based
production companies that make their movies overseas. What we do
(02:15):
know is that President Trump has indicated that he would
invoke these tariffs on the basis of national security concerns.
Speaker 3 (02:21):
That signals two things for US.
Speaker 4 (02:22):
One, that's likely the justification that this White House will
take Whether or not that means they're going to evoke
IIBA or Section two thirty two really remains to be seen.
Since we haven't actually seen an executive order putting these
into motion. We do know that the USTR and Commerce
Department are working on looking into this, and the second
thing it indicates is that these tariffs would likely face
some heavy legal scrutiny if they are put into effect.
(02:45):
As you mentioned, the music the movie industry was caught
pretty off guard by the announcement.
Speaker 2 (02:50):
I mean, we're seeing sir an analysts saying this would
just reap devastation upon the US entertainment industry tailer. More broadly,
costs would rise the many, but remind us of perhaps
what the anxiety has been why other countries US outside
the US. We think the UK, we think Canada have
managed to pull away a lot of US production.
Speaker 4 (03:11):
Right, and that really does have to do with the
tax incentives and lower labor costs as well as production costs.
Speaker 5 (03:16):
And the Most Picture.
Speaker 4 (03:17):
Association does say that employees about two point three two
million people in the US in this industry alone, but
actually pulled some other statistic for you, which is that
US spending on film and TV production fell twenty eight
percent between twenty twenty one and twenty twenty four, according
to data from research firm fraud Pro and its countries
that you're talking about, like Australia, New Zealand, the UK,
(03:39):
also Canada that have really pulled ahead when it comes
to lessening these higher costs in order to make movies,
and quickly, I will just throw one other country in there,
because this isn't the first time that we've seen movies
come into this trade war of calculation and talk. It's
China actually not necessarily that they've been taking US production,
but of course, as you well know, last month they
(04:00):
did say that they were going to restrict US of
Film's access to their market. So it's kind of continuing
how we're seeing these tariffs really go beyond just what
we traditionally think about.
Speaker 2 (04:10):
Certainly, Tyler Kendall, with all the latest from the White House,
we thank you. Now let's get more market reaction, not
just media entertainment stocks, but more broadly. Daniel Morgan's with
us senior portfolio manager that's the Nervous Trust Company, and Daniel,
you focus mainly on the Magnificent seven, big tech and
chips more broadly rather than media names. But it does
feel that once again tariffs are the eye of the storm.
Speaker 6 (04:32):
Yeah, so, Caroline, I mean it keeps extending to different groups.
I mean, obviously it's going to affect a company like Netflix,
which is kind of used to be in the talk
of those saying magnificent seven. But again, you know, Caroline,
if you look at the tariffs in terms of all
these different industry groups, it seems like technology is the
hardest hit. Even though there's a reprieve on PCs and smartphones,
(04:54):
you don't know if that reprieve is going to be
lifted up. And chips another sector that is obviously heavily
impacted by tariffs. So that's really been the you know,
black cloud over the group that's kind of kept it
from rebounding like the S and P five hundred has.
It's still a down about fifteen to sixteen percent off
mid February highs, where the SMP is only off about
(05:17):
maybe eight to ten percent. So it's a tough, tough sector,
not only media and movies, but also in the tech sector.
Speaker 2 (05:25):
That's going into individual names, Daniel, because of course we
just talked about how Apple has switched places with Microsoft,
it's no longer the most valuable company on the SMP
for example, we seem to see hardware hit the hardest
at the moment. Is Apple just one that you cannot
rebuy into until as a future catalyst, Carolin.
Speaker 6 (05:43):
Apple's a tough stock because before the teriffs even came out,
there were a lot of concerns that there would be
a delay in users upgrading to the new iPhones because
they didn't have the same AI serie personal assistant technology
that everybody was hoping for that would be unveiled. Looks
like it's going to go into the iPhone seventeen that's
(06:04):
not coming out to the fall. If you look at
the most recent quarter, even though there were no direct
tariffs at the time, I mean, iPhone revenues were only
up about two percent.
Speaker 3 (06:14):
So they are in a really.
Speaker 6 (06:16):
Difficult position caring because they are so heavily entrenched in
the Pacific Rim, not just China, but through all their
supply chains and manufacturing. They do about fifteen percent in India,
but for them to move that out of that part
of the world is going to be very challenging.
Speaker 5 (06:31):
So they have a very tough road.
Speaker 6 (06:34):
To go, and there were factors and headwinds that were
up against them even before the whole tariff news.
Speaker 2 (06:40):
And Daniel, we actually at least got some sort of
admission of a lack of clarity from executives, and we
got some feeling for fundamentals in earnings. We've still got
earnings to come. I know you've been thinking about what
AMD is going to give us. Tonight, we get pal
Andeer and it's been a real winner over the last
year or so. But even software feels a little bit
of pressure today. You look for in some of these
(07:01):
earning still left.
Speaker 6 (07:03):
Well, Palantar is a whole different game, Carolin, because they're
in the defense industry, but they're a tech sector. But
you know, looking into let's say advanced market Devices, which
reports on Tuesday, we know that Intel, when they reported
two weeks ago their data center group revenues were up
ten percent. Will get another window into data center revenues.
Speaker 2 (07:22):
I'm afraid, Daniel, I'm going to have to leave it
there for a moment, so kind of you to join us,
but we have to go over to the Milken Conference
in Los Angeles. Treasury Sectory Scott Besson has started speaking seventies.
Speaker 7 (07:33):
He had the rare combination of guts and intellect to
defy the Wall Street consensus. With his heterodox approach to
junk bonds, he pioneered a new asset class known today
as high yield bonds. By staying true to his vision,
Mike overturned decades of economic orthodoxy. He bootstrapped entirely new
(07:56):
industries by redirecting billions of dollars in cap to non
investment grade companies.
Speaker 5 (08:03):
His colleagues on Wall Street told.
Speaker 7 (08:05):
Him he was delusional and a fool, but ultimately history
proved him right.
Speaker 5 (08:11):
Sound familiar like Mike Milkan.
Speaker 7 (08:14):
President Trump has no shortage of critics in establishment circles,
but he proved them wrong in his first term, and
he is proving them wrong again today. On President Trump's
first day in office, he vowed to usher in a
new golden age for our country, a golden age. America
deserve a golden age. America deserves a golden age economy.
(08:40):
So for the past one hundred days, we've been preparing
the soil. We have uprooted government waste and harmful regulations.
We have planted the seeds of private investment, and we
have fertilized the ground with fresh tax legislation. Next, we harvest,
and we want you to harvest with us. America is
(09:01):
the showing point of global finance. We have the world's
reserve currency, and the deepest and most liquid capital markets,
and the strongest property rights. For these reasons, the United
States is the premier destination for international capital, and the
administration's goal is to make it even more appealing for
(09:22):
investors like you. This morning, I will explain how we
plan to achieve that goal. The primary components of the
Trump economic agenda, trade, tax cuts, and deregulation, are not
standalone policies. They are interlocking parts of an engine designed
to drive long term investment in the American economy. Our
(09:46):
goal with trade policy is to level the playing field
for our great American workers and companies. With a level
playing field, American industry can out compete all challengers, tariffs
or engineer to encourage companies like yours to invest directly
in the United States. Hire your workers here, build your
(10:08):
factories here, make your products here.
Speaker 5 (10:11):
You'll be glad you did, not only because we have the.
Speaker 7 (10:14):
Most productive work force in the world, but because we
will soon have the most favorable tax and regulatory environment
as well. This is where tax incentives and deregulation come
into play. You may have heard one big, beautiful bill
floating around Congress. This bill is big and beautiful for
(10:35):
Main Street America and investors alike. The President's signature tax
legislation will prevent an enormous tax hike on Main Street
by making the small business deduction permanent. It will also
provide tax credits and deductions for research and innovation to
stimulate investment in high tech operations. It will restore one
(11:00):
hundred percent expensing for equipment while expanding that incentive to
new factory construction. The objective to accelerate investment in American industry.
To make that investment as seamless and rewarding as possible,
President Trump has embraced an ambitious deregulation agenda. This includes
(11:23):
expansive permitting reform. The President doesn't want to just drill,
baby drill, He wants to build, baby build.
Speaker 5 (11:31):
To that end, he.
Speaker 7 (11:32):
Has signed executive orders to reduce the federal approval process
for new energy and construction projects from several years to
just a few months. This simple reform will unleash the
creative potential of America's builders. It will empower business leaders
like you to put your capital to work as quickly
(11:54):
and efficiently as possible. The building renaissance will be fueled
by the President's Energy Dominates agenda. Energy is the base
layer of all economic activity.
Speaker 5 (12:06):
That's why the.
Speaker 7 (12:07):
Administration champions and all of the above approach to energy
development to drive down the cost of doing business. I
hope you can see the bigger picture now. The Trump
economic agenda is more than the sum of its parts. Trade,
tax cuts, and deregulation may be three distinct policies, but
(12:29):
each policy is mutually reinforcing and acting in concert. They
push toward the same goal to solidify our position as
the home.
Speaker 5 (12:39):
Of global capital. The result of.
Speaker 7 (12:42):
The President's economic plan will be more more jobs, more homes,
more growth, more factories, more critical manufacturing plans, more semiconductors,
more energy, more opportunity, more defense, more economic security, more innovation.
In short, more of all things we need the most.
(13:05):
The President believes we can achieve more together. This is
the abundant vision he has for the future. He wants
everyone to be a part of it.
Speaker 5 (13:15):
Thousands of businesses are now catching the President's vision.
Speaker 7 (13:19):
Since he assumed office in January companies have pledged to
invest trillions into the US economy. President Trump has secured
more investment for our country in one hundred days than
President Biden did during all four years. Entrepreneurs, too, are
starting to understand what the President is.
Speaker 5 (13:39):
Trying to accomplish.
Speaker 7 (13:41):
Mart sold one of the highest levels ever recorded for
new business applications. Many of these men and women, like
many of you, are grasping that America First is a
blueprint for.
Speaker 5 (13:52):
More abundant world for now. A parting thought.
Speaker 7 (13:57):
When I entered public service, I spent more than forty
years in the asset management business. There one mantra guides
one of the world's most successful investors. Never bet against America.
Warren Buffett coined the phrase, and it's been his load
star as long as he's been in the game. Never
bet against America captures a time tested truth. The American
(14:22):
economy is unstoppable. Throw whatever you will at our capital markets,
the Great Depression, two World Wars nine to eleven, a
COVID recession.
Speaker 5 (14:33):
Of the last few years, or sky high inflation.
Speaker 7 (14:37):
Each time the American economy gets knocked down, it gets
back up again, and it gets back up even stronger
than it was before US markets are anti fragile. Indeed,
the entire history can be distilled into just five words
up and to the right. On a long term horizon,
(14:59):
it's it's never a bad time to invest in America,
but especially now. The United States is entering a new
golden age of economic prosperity for both Main Street and
Wall Street. And we don't want anyone to get left behind.
Come with us so we can build a more abundant
America together.
Speaker 3 (15:17):
Thank you all, Please welcome Institute Chairman Michael Milkin.
Speaker 8 (15:37):
So, as a scholar in college, a leading university, an
accomplished fund manager, former professor, and distinguished career in finance
and academic, your range of life options was unlimited. What
inspired you to choose the field of public service? Joining
(16:02):
President Trump's administration in a very high profile and I
should say high pressure role.
Speaker 5 (16:11):
I would agree on all the above.
Speaker 7 (16:15):
So, Mike, there was a long, long art desire for
public service. I had tried or considered going to the
Naval Academy, and I was applying in nineteen seventy nine.
Speaker 5 (16:26):
I wanted to serve my country.
Speaker 7 (16:28):
Due to central orientation, I was unable to so, even
since I was a teenager. I wanted to serve my country,
and I'd had a great career like many people in
this room and finance, the country had been good to me,
and as an economic history scholar, I was shocked at
(16:49):
what was happening with these budget deficits. So last year
six point seven percent of GDP highest ever when.
Speaker 5 (16:58):
We weren't at war, weren't in.
Speaker 7 (17:00):
A recession, and I wanted to come out from behind
my desk and be part of the solution because I
was afraid the four more years of that, and it
was kind of a deeply cynical plan.
Speaker 5 (17:13):
I thought, run up the.
Speaker 7 (17:14):
Debt and then have to raise taxes and really buy
me the American engine of growth, innovation, and opportunity.
Speaker 8 (17:23):
Well, we once again were very happy you took up
that mission. And I can't think of a better person
at this time to be the Secretary of the Treasury.
Speaker 5 (17:35):
Let me try.
Speaker 8 (17:40):
Over the years, we've had a number of Secretary's Treasuries
that were not really into financial markets, and so you're
the right person at the right time. But it's interesting
when I think about it, and how do you strike
the balance between the administration's goal of reindustrialization in the
(18:03):
US and the risk of isolating the US economy.
Speaker 7 (18:08):
Well, I think that they're not mutually exclusive. And as
I've said many times that obviously in this trade puzzle,
China's the biggest piece.
Speaker 5 (18:22):
Where do we end up with China?
Speaker 7 (18:24):
And I said during IMF week in Washington, said, you know,
it's possible that we could, as Ray Dalio might say,
do a big, beautiful rebalancing that if we want more manufacturing,
everyone agrees except Chinese leadership, that they need more consumption,
we could actually do that together. And then look on
(18:47):
the other side that getting better terms of trade is
not always a right line.
Speaker 5 (18:55):
It's not always a pleasant process.
Speaker 7 (18:57):
But I think at the end, the trading relationships will
be stronger, our security and values ties will still be there.
Speaker 5 (19:09):
I look back and I.
Speaker 7 (19:10):
Think about the example of NATO and German fiscal spending.
So I lived in London for a long time, rand
the Soro's office there, and since the well forever actually
the whether it's a French president, the Italian Prime minister,
people in Brussels were trying to break open the German piggybank,
(19:35):
and President Trump not in a straight line, not in
what would be what anyone would call a diplomatic manner
has gotten NATO countries to step up and meet their
spending requirements. I think these numbers are approximate, but I
think only twenty five percent. When he came in in
(19:56):
twenty seventeen, only twenty five percent of NATO country we're
meeting their spinning requirements. Now I think only twenty five
percent aren't. So the Germans for the first time are
going to allegedly do a big fiscal spin which will
drive European growth, And so can we do the same
thing on trade?
Speaker 5 (20:17):
I think so.
Speaker 8 (20:18):
So let's talk maybe about a specific situation. You recently
sign an historic economic partnership with Ukraine, and as you said,
there was a little few bumps along the way. Can
you walk us through the role that the Treasury played
and what is expected to come out of this agreement?
Speaker 5 (20:42):
And let's hold backwards that. I was amused, gratified.
Speaker 7 (20:52):
To see that on Saturday as I was coming out here. Friday,
as I was coming out here, Washington Post lead headline
was Russia now nervous after US Ukraine signed deal, and
that I believe that this would happen in February. President
(21:15):
Trump believed that it would happen in February. And this
was President Trump's idea. He likes negotiating, as you know
a lot of people in this room probably know, and
he likes creating negotiating leverage for himself and the Ukraine
Investment partnership. The economic partnership was his idea, and he
(21:36):
believed that it would do several things. One, it would
create more leverage for him with the Russian leadership when
it was time to go to them. So the idea
was start with Ukraine, sign a deal that shows that
there is no daylight between the US and the Ukrainian people.
(21:58):
It would be a symbol to Ukrainian people that the
US is still there. It would be a symbol to
a tired American public, skeptical of more financial commitments, that
it was possible to have a shared prosperity with Ukraine.
And then it would in essence be a tacit security
(22:21):
guarantee because of the economic partnership. I went to and
just to give you the timeline. So he tests me
with throwing up the document speaking with Ukrainians. I thought
it was a good idea to actually go to Kiev.
For anyone who hasn't been you fly to Poland, you
(22:43):
take a ten hour night train the end of Kiev,
and you do that to keep from the getting shot down,
and which good And everyone was saying, oh, look, this isn't.
Speaker 5 (22:57):
A good deal. This isn't a good deal. And I said, well,
if it's.
Speaker 7 (23:00):
Not a good deal, why did the Russians bomb Kiev
for the first time? So I went on February tenth,
the Russians bomb Kiev at four in the morning for
an hour for the first time since November because they
knew the train arrived at eight and so before I
(23:20):
got there. So if the Russians, if we were pro
Russian and this was a terrible deal for the Ukrainians,
why didn't the Russians want it signed?
Speaker 5 (23:29):
So then.
Speaker 7 (23:32):
President Zelenski elected not to sign it that day. He
elected not to sign it. At the Munich Security Conference
a few days later, there was a little incident at
the White House. Some of you may have seen. President
Trump called it great TV and when the deal went
south that day. And I actually think in terms of
(23:54):
the final deal, and I'm sure you everyone in this
room has seen it that sometimes the blow up, you
end up with a better deal. So February twenty eighth
was the blow up in the Oval, and what was
going to be signed that day was actually just.
Speaker 5 (24:09):
A four page memorandum of understanding.
Speaker 7 (24:12):
After that blow up, Treasury made the decision to try
to make the blow up into an opportunity and my team.
I instructed my team to go straight to writing the
full agreement, which is six different agreements, varying lengths, but
(24:32):
hundreds of pages. So we worked on that document, and
then when there was the recovery and trust between President
Trump president Zelenski after the meeting at the Vatican, we
signed the deal a few days later. And look, I
think it's win when what it is not is one
(24:53):
of these rapacious Chinese deals.
Speaker 5 (24:55):
Sign here, it's a loan to own.
Speaker 7 (24:58):
You're going to default on the debt. We're going to
own all your minerals, and that's life. This is economic partnership.
They put in assets, we put in capital from the DFC,
American best practices and know how.
Speaker 5 (25:12):
And it's fifty to fifty. It's equity, not debt.
Speaker 7 (25:16):
And some of our European partners were criticizing me at
the G seven and I said, you know, you know, guys,
if you want to tray if you want to do
a debt for equity swap, why don't you write off
your Ukraine debt and we'll let you into our partnership.
Speaker 5 (25:31):
No one's called me yet.
Speaker 8 (25:33):
Well, you know, I think what struck me, mister Segrete
was this major oil fine off Guiana and Venezuela rattling
the sabers, and had sent a couple military ships. The
US then asked them what you're doing because that's Exxon
(25:55):
that's a US company. And I think that to me
underlined part of the strength of this agreement.
Speaker 5 (26:01):
You struck.
Speaker 8 (26:03):
Let's talk about one element that many people have been
concerned about, and that is what are the key components
of deregulation. I know it's part of your economic strategy
to spur growth. Are there any specific regulations that are
at the top of your list for reform.
Speaker 5 (26:25):
Yes.
Speaker 7 (26:25):
As I said one of the smaller group meetings last night,
maybe a few people in the room interested in private credit,
and Treasury is taking the lead on financial deregulation, and
I think private credit is an incredible new the bolt
on to the world's deepest the breadth and death of
(26:49):
the world's deepest capital markets, but the growth of private
Credit tells me that the regulated banking system has been
too tightly constrained.
Speaker 5 (26:59):
So we have set up a treasury.
Speaker 7 (27:04):
I convened something called FSOC Financial Stability Oversight Council, and
President Trump tasks me with helping him choose the leaders
for the financial regulators. So they have installed a new
vice chair for Supervision at the FED, Mickey Bowen.
Speaker 5 (27:22):
We are going to have a new.
Speaker 7 (27:24):
OCC head FDIC, Paul Atkins has just taken over the SEC.
Brian Quinn is at CFTC. So the regulators are aligned
and we are going to be like safe, sound and
smart and redoing regulated financial entities.
Speaker 5 (27:45):
And then, as I mentioned in my.
Speaker 7 (27:47):
Talk energy, that's a pretty easy playbook. But the real
impetus is going to be on permitting across all industries.
And that's where the EP comes in, putting pressure on
state and regular The federal government's going to put pressure
on state and local governments to speed up the process,
(28:10):
the permitting process. So what's the use in giving one
year depreciation if it's thirty six months to break ground.
One CEO recently told me he was talking about the
difference between doing business in Texas and Illinois. He said,
we started a project in Texas. From the day we
(28:33):
went to the city of Houston to talk about it
to the day I cut the ribbon took two and
a half years.
Speaker 5 (28:40):
In Chicago, we.
Speaker 7 (28:42):
Are still seven years into the planning process, so we
want to make everyone look more like Texas.
Speaker 8 (28:48):
Well, you have you're in an area here called Malibu
where maybe in fifteen years you can build a house.
So we are very accussed them to this. Let me
talk about another issue. It was in twenty seventeen that
our theme of the Global Conference was building meaningful lives.
(29:12):
Part of that was a reflection on the disruptions we
saw emerging from advances in AI, robotics, digital assets. The
world we felt was heading for significant change, and we
scheduled dozens of sessions around that area. Eight years later,
(29:33):
you're now the Treasury Secretary navigating the nation through these
various changes. Give us a broad view as to how
you see these issues today.
Speaker 7 (29:45):
Well, I said in my confirmation hearing that we have
to win in AI and quantum that if the United
States doesn't take the lead, if we don't win, everything
else doesn't matter.
Speaker 5 (30:00):
If we lose the and I think.
Speaker 7 (30:05):
China's catching up, which is natural, but I think we
will maintain.
Speaker 5 (30:11):
Our leadership on that.
Speaker 7 (30:13):
And again, what we are trying to do is not
pick winners and losers.
Speaker 5 (30:18):
We are just.
Speaker 7 (30:19):
Trying to set the environment for the best opportunity for
our entrepreneurs to succeed. Stop intellectual property theft, and in
terms of making it accessible to all Americans, I think
that's going to be very important.
Speaker 5 (30:39):
I was out on the campaign.
Speaker 7 (30:40):
Trail with President Trump and I was struck by there
had been a big migration by the venture capital community
President Trump. It so on one side, you've got the vcs,
the most innovative the people in the world. You got
Elon Musk, the richest in the world, and the presence.
(31:02):
Penultimate rally that I went to was in Pittsburgh, and
the steel workers showed up and they got their best on.
They've got their hard hats, they've got their families. And
the real idea is to make sure that innovators can
innovate and steel workers can have the same quality of
life and opportunity, and that their kids could be the
(31:27):
Silicon could be the Silicon Valley entrepreneurs, or they can
stay and have the same life or better that their
folks had.
Speaker 5 (31:36):
In Pittsburgh.
Speaker 8 (31:37):
Well, that is a great goal and we hope we
achieved it. From that standpoint, interest rates, you know, you've
often talked how important that ten year interest rate level is,
and I when I look at financial markets over a
long period of times, I can sometimes identify when that
(31:59):
end vigil had come into financial markets, by what period
of time, and the interest rates. So in the nineteen seventies,
particularly the volatility of financial markets, you saw over the
next decade many of the people that were CFOs became
CEOs because how you financed your company allowed it to exist.
(32:23):
In the last few years, we've lost three as independent
companies major financial institutions due to the fact that they
had bought a quarter of a trillion of US government
intermediate securities and borrowed overnight. So when you look at
interest rates in the tenure, and as I mentioned to you,
I got this app on my phone that anytime the
(32:47):
US government's prices changed by more than two percent in
two hours, off my phone goes.
Speaker 3 (32:55):
So in the nineteen.
Speaker 5 (32:57):
Fifties, please don't share that with the president.
Speaker 8 (33:02):
So in the nineteen fifties, if you were trading governments,
it was like watching pain dry. You could see an
entire variation of maybe two percent in price in an
entire decade. We now have seen a variation of more
than two percent, occurring more than one day. How do
(33:23):
you see the importance of the level of interest rates
in our economy and what you want to achieve.
Speaker 7 (33:31):
I think that I'm not going to talk about the FED.
I said, I won't talk about their future mistakes. I'll
only talk about their past mistakes. So I thought it
was focused. I thought it was important to focus on
the tenure. And the tenure has a lot of things
(33:54):
wrapped in it. It's the short term rates, it's the
term premium, and we're focused on creating the best environment
for stable rates. And I think a lot of what
we saw in April was this periodic unwinding that I've experienced,
(34:16):
you've experienced, most people in this room have experienced in
their career. I'm a big believer in the Hyman Minsky
stability leads to instability. So I think we probably had
a very stable period. A lot of leverage players built
up very large positions. There was an uncertainty shock they're out.
(34:40):
But what we're trying to do is to create go
back to the from one point zero non inflationary growth.
So I think if we can put non inflationary growth
in place, and take back to your initial question, why
am I sitting here, is to take away the credit
risk of the US government, then I think rates will
(35:02):
naturally come down. And as I've said before, there's an
opportunity here that.
Speaker 5 (35:08):
If we can do it.
Speaker 7 (35:09):
The goal on one side, I call it reprivatizing the
government or reprivatizing the US economy. On one side, we
want to bring down government borrowing slowly, maybe decrease the
deficit by one percent a year, so time President Trump
leaves office, we're back at the long term average of
about three and a half percent deficit to GDP, and
(35:31):
the denominator grows faster than the numerator debt to GDP
goes down, So we're decreasing the government in the economy
at the same time we are right sizing government spending and.
Speaker 5 (35:49):
Government employment.
Speaker 7 (35:50):
And then on the other side, through financial deregulation, we're
releveraging the private sector, and then the excess employment that
was shed in the government economy can go to the
private sector. One thing I've never lived in DC before,
but one thing that really struck me was within a
ten mile radius of DC. Twenty five percent of the
(36:15):
nation's economy pulses through there, and that's too much. Traditionally
it's about twenty one percent, and we've got to make
sure we have a stewardship obligation to make sure that
that is spent wisely.
Speaker 8 (36:31):
So we were making decision where to have the Milking
Institute School of Public Health. Besides the fact the executive
office building is one block away from GW, but every
major decision on medical was located within a mile or so.
And so the decision, ultimately, with the talent we had there,
(36:53):
with Lynn Goldman and others, is we would go to
GW because the decisions were being made there.
Speaker 5 (37:00):
As you know, we spend.
Speaker 8 (37:02):
Twelve years building this building across the street from your
new home and the Treasury and the Center for the
American Dream, and we thought it was a four year project.
Speaker 5 (37:13):
It turned out to be a twelve year project.
Speaker 8 (37:18):
But this passion for the ideal of American Dream, I
believe is something you truly believe in. We've been asking
ten thousand individuals in more than one hundred countries around
the world that live there or have come here how
they interpret that phrase. What does that mean? What does
(37:41):
the American dream that you're going to protect for so
many of us?
Speaker 5 (37:44):
What does it mean to you?
Speaker 7 (37:48):
It means a shared vision. We're going to approach the
two hundred and fiftieth anniversary next year, or we will
have the two hundred and fiftieth anniversary next year, and it's.
Speaker 5 (37:59):
What what does the next two point fifty look like?
Speaker 7 (38:02):
And to me, it's the equal opportunity for great outcomes.
Speaker 5 (38:09):
It's like I.
Speaker 7 (38:11):
Said, it's equal opportunity if you're one of the children
of the construction workers in the Ducaine Arena on November fourth,
that you might be sitting here because you founded a
financial services company, or because you're a medical researcher, or
it's the opportunity for people in this room to continue
(38:33):
to prosper.
Speaker 5 (38:35):
But to me, it's two things.
Speaker 7 (38:38):
It is the fact that the system works and that
there is mobility, that we get rid of these discouraging
surveys of families that and children who don't think they're going.
Speaker 5 (38:52):
To do as well as their parents.
Speaker 7 (38:54):
So we need a belief in the system and we
need to canue making sure that the system works.
Speaker 5 (39:02):
So to me, that's the American Dream.
Speaker 8 (39:04):
Well you've wrapped that up in in a bow for
us here, and that what we have found in every
survey for twelve years is the number one essential agreement
condition that exists for the American dream was freedom to
live your life, whether you wanted to be a steel worker,
(39:25):
or whether you wanted to work in finance or wherever
you wanted to pursue, or whether you wanted to be
the soccer coach of your daughter's soccer team. So, mister Secretary,
we couldn't be happier that you've took up the mantle
of public service and we look forward.
Speaker 5 (39:42):
To your stewardship for the next few years. Thank you
very much.
Speaker 2 (39:45):
Thick you you were listening to US Treasury Secretary Scott
Lessont of course with Michael Milkin at the Milking conference
over in Los Angeles, just tying up some of the
statements that were made more broad by the Treasury Secretary
talking about how the United States is anti fragile in
(40:05):
particularly they dwelt upon the ten uere important to focus
on the tenure Treasury and has lots of components to it.
He's saying they're trying to create the best environment for
stable rates. They want to go back to Trump one point, oh,
non inflationary growth for the US economy, take credit risk
out of government debt and bonds. More broadly, rates can drop,
he thinks, and there's too much of the US economy
(40:26):
pulsing around Washington, DC in particular, talked about his view
on the American Dream, but also a little hint at
what means for security more broadly, talking about the US
Ukraine deal being a win win, wanting for the banking
sector that stability, but talking about the system being too
tightly constrained, too overregulated. And then to technology return and
(40:47):
he said that the US must win on AI and quantum,
but the China is indeed catching up. Let's check in
on these markets post the Treasury Secretaries comments, we're still
down five tens percent off youelng in then, as that
one hundred have been trading around this range throughout the day.
This is more a symptom of what's happening in grander
scheme of Macro worried about trade tariff concerns, particularly focused
(41:07):
on the world of Hollywood right now, where indeed the
milking conferences upon us move on and have a look
what's opening Crypto has been a risk asset that's been
selling off as well. Bitcoined down by about two percent.
We're at ninety eight hundred and fifty three, just showing
that risk off attitude. But the individual socks that we
want to keep an eye on because look, you are
seeing pressure throughout the tech sector today, Netflix in the
(41:28):
eye the stormers were worried about the movie industry and
about content being produced. A BroadWare down by one point
six percent. Dig into that in a moment. We still
got earnings this week. Think AMD on Tuesday. Palenteer comes
after the bell tonight for down three tenths of percent.
Remember this stock has been on a tear up more
than sixty percent so far this year. Software has won
out and even when they're really focused on the defense sector.
Apple off by more than three percent. It is no
(41:50):
longer the most valuable company in the United States on
the S and P five hundred. It's been supplanted by Microsoft.
We're in so many problems for Apple right now post
their earnings. Let's think into it. Because Bluemg's Mark German
is standing by he too in LA But Mark, in
this week's power On newsletter, you write that Apple faces
like a make or break moment, a laundry list of
once in a decade problems hitting at the same time.
(42:13):
Tariff's front and center, but so much more Mark.
Speaker 5 (42:17):
Yeah, that's right.
Speaker 9 (42:18):
I mean Apple is able to deal with a lot, right,
but right now they have I would say more than
a lot going on. They have tariffs right that could
up end product pricing, device planning, is supply chain. You
had a judge in California rule last week that Apple
must stop charging developers for in AT purchases completed outside
of the App Store. Obviously, the vast majority of revenue
(42:40):
Apple gets from the app store is in AT purchases.
That's why Apple tried to protect that twenty seven thirty
percent commission at such an extensive level. You have the
threat of losing another twenty billion dollar business.
Speaker 5 (42:53):
The search deal with Google.
Speaker 9 (42:54):
Google obviously pays Apple that much to make the Google
search engine the default provider on the Safari web browser
across all of Apple's products and services, and so that
is another lever that could potentially hurt Apple. You have
the ongoing struggles in AI, you have a developer conference
in June. You have the ongoing DOJ lawsuit you have
(43:15):
increased scrutiny happenating in the European Union, in Korea and
Japan constantly new threats of fines for a large percentage
of their local businesses. And of course the backdrop is
the company's performance in China, where a turnaround is very
much needed after it continued annual declines there.
Speaker 2 (43:32):
And we saw that in their earnings posted just last week.
Mark German. It's was always a must read. I urge
of yours to go and check out Power on thanks
to summarizing for us. I Meanwhile, let's get over to
the world of big tech, from big tech to the
big screen, because media stocks they're under pressure after President Trump,
and that's his plans to impose tear are some movies
produced overseas. Lucas Shaw standing by with more and look
(43:54):
this feels this truth social post where we learn about
a potential one hundred percent tariff has more questions than
answers for the industry right now.
Speaker 10 (44:04):
I mean, without question, a lot of people were thrown
off guard, very confused by what exactly it meant and
also what Trump's real intentions are. You know, based on
our reported we know that he spent some of The
Weekend with actor John Voyd and Voights manager Stephen Paul.
John Voyd is one of kind of Trump's ambassadors to
(44:25):
try to figure out how to bring production back to
this country. Keep in mind, there's still a lot of
production that happens in the United States, but there has
been a lot of production that has moved to places
like the UK and Canada. You know, I think they
talked about things like incentives, but Trump loves a tariff,
and so he started talking about tariff.
Speaker 2 (44:43):
Well, stick thin carrot, and so we see who most
implicated here, because Barcley's already coming out with a note
basically saying we export more than three times and we
import in terms of movie making, and you're hurting the
very industry you're trying to help.
Speaker 10 (44:57):
Yeah, the Motion Picture Association, which is the trade group
that represents all the Hollywood studios, has not said anything publicly,
but they do have reports where they showed that the
US is a net exporter, that we have a positive
trade balance with every other country. I mean, you just
think about it.
Speaker 5 (45:14):
The biggest, highest.
Speaker 10 (45:15):
Grossing movies of the year every year tend to be
US movies. You know, the most watched TV shows the
most popular streaming services. All of these are American products
for the most part. You know, in terms of the impact,
it's really hard to know without knowing how the tariffs
to be applied.
Speaker 5 (45:29):
A lot of people have.
Speaker 10 (45:29):
Asked me, like, how do you even tear iff a movie?
And I'm not sure what to tell.
Speaker 2 (45:32):
Them exactly what value is the movie at and where
exactly who finding that revenue stream to hit Lucas Shaw,
We appreciate it. I'm sure we're happing many more questions
coming away soon. Meanwhile, though, coming up, you know, musk
says Ai should be used to replace the functions currently
done by some public workers. That conversation's up next, plus
so much more for the milkn Conference. A conversation with
(45:53):
the ny CEO Robin Vince is a.
Speaker 3 (45:55):
Blue met technology.
Speaker 2 (46:08):
Let's go back to the Milking Conference now for a
conversation with bny CEO Robin Mince Romain mostictionally base as
selling by.
Speaker 11 (46:17):
Thanks Carolin and live here on the Milkin stage. The
CEO of B and Y joins us right now, Robin Vince.
Speaker 3 (46:23):
Robin, you're a man who's been traveling the world.
Speaker 11 (46:26):
You're a man with two trillion dollars in assets under management,
fifty three trillion dollars under your custody.
Speaker 3 (46:33):
What are your clients asking you right now? Yeah, well
there's a lot going on.
Speaker 12 (46:36):
So it's great, first of all, great to be with you,
Great to be here at milk And this is one
of those places where everything comes together from around the world.
As you said, I have been traveling and actually you've
just hid different things from clients in different places according
to where you are. I've been in Europe, I've been
in India, I've been in the Middle East.
Speaker 3 (46:54):
That's all over the course of the past couple.
Speaker 12 (46:56):
Of weeks, and I would say the sentiment varies a
little bit. We're having to explain.
Speaker 3 (47:01):
So, first of all, there is a signal.
Speaker 12 (47:03):
A noise problem when we talk to our clients internationally.
People can't really tell the difference between the tactics and
the strategy of what's coming out.
Speaker 3 (47:13):
You know, what's the difference between tariffs.
Speaker 12 (47:15):
And real trade policy? What does it mean on deregulation?
Why are these things happening? And so I think all
us CEOs find themselves in this perspective.
Speaker 3 (47:24):
We were joking about this earlier on, but.
Speaker 12 (47:26):
We kind of have to be a bit explainers in
chief first and foremost, so what's actually going on.
Speaker 3 (47:32):
That's what they're interested in.
Speaker 12 (47:34):
Now, within those continents there are different perspectives as well.
So in India, there was a lot of conversation about, Okay,
what are the opportunities for India, what might a trade
deal look like? How could the India benefit from the
opportunities associated with all of this? In Europe a little
bit more what on earth is going on?
Speaker 3 (47:53):
Is the US a reliable partner?
Speaker 11 (47:55):
It's one thing to be confused by what's going on
in the US, But are those clients actively or at
least specifically.
Speaker 3 (48:03):
Talking about pulling away from the US?
Speaker 12 (48:06):
Well, I think some of them are thinking about it,
and so in Europe I would say there's a little
bit more of that narrative, less so in the Middle East.
Speaker 3 (48:13):
The Middle East a recognition that they are.
Speaker 12 (48:16):
Sort of sitting in the middle of the world geographically
and also geopolitically in some cases, and so they observe
what's going on, they take some reaction to it, but
at the end of the day, they're interested in long
term relationships. In Europe, I would say there's a little
bit more of a reaction against it.
Speaker 3 (48:33):
Maybe they feel a little bit more that they've been.
Speaker 12 (48:36):
Put on the spot, and there are certainly conversations about
can they derisk now, I say de risking is a
little easier said than done.
Speaker 3 (48:44):
Sometimes there's a.
Speaker 12 (48:45):
Reason why the US capital markets are the world's greatest,
the most liquid, the dollar supremacy, the treasury is the
risk free asset the growth in the United States. It's
not so easy to just say, hey, we're out up
to the.
Speaker 13 (48:58):
Treasury market because this is where Bnymelan is a huge player.
B and Y is this massive central intermediary.
Speaker 3 (49:05):
What is the risk?
Speaker 13 (49:07):
Ultimately, it's not just the liquidity concerns we've seen in
the midst of the trade war. It is also what
we're going to see in the future as we get
closer to that X state. Do you have any concerns
around how countries around the world might view the treasure Well.
Speaker 12 (49:22):
I think we all have to be very realistic about
the fact that the treasury market is one of the
world's most important markets.
Speaker 3 (49:29):
As you said, yes, liquidity was reduced. The depths at.
Speaker 12 (49:33):
The top of the order book was down probably about
eighty percent or so at one point two or three
weeks ago.
Speaker 3 (49:41):
Now that doesn't mean.
Speaker 12 (49:42):
That the market wasn't functioning. It was working really well.
We were settling over twenty trillion dollars of treasuries a
day and it was all working, but there was it
was harder to move blocks of risk. Now it's a
complicated problem because yes, we've got the x state. Yes,
seven percent deficit is it's a significant thing.
Speaker 3 (50:01):
To be running and at some point that has to
be brought under control. That is not a long term,
tenable situation. It's got to be brought down to a
more manageable number. So people are looking at that.
Speaker 5 (50:11):
Now.
Speaker 12 (50:11):
Compounding all of that is the question of okay, do
people still have the faith in the United States and
the treasury market? And that's why I would say, of
course people are talking about it, but there are a
lot of things that underpin the US treasury markets and
the confidence, the dollar supremacy, the rule of law, the liquidity,
and it's easier said than done to pull away from
(50:32):
something like that.
Speaker 13 (50:32):
The Treasury Department has been talking about the potential to
provide relief for the banking system via the SLR, the
supplementary leverage ratio in order to make treasury markets function
more easily in times of these sources of stress.
Speaker 3 (50:48):
Do you think that's necessary?
Speaker 13 (50:49):
Does there need to be regulatory relief more immediately and
will it fix the problem?
Speaker 12 (50:54):
Well, I think it will be helpful, is the punchline
answer to your question. And Secretary Bustance been pretty clear
about this. He is a supporter of making sure that
we have the deepest, most liquid market in the world
in the treasury market to benefit the US taxpayer in
the US economy. And so the question is what are
all of the things that can be brought to bear
(51:16):
to make that true. And this is a little bit
of an extension of what the Secretary Beston and President
Trump have said in terms of the policy.
Speaker 3 (51:22):
It's a three legged stool.
Speaker 12 (51:24):
They had objective around trade, they have an objective around taxes,
and they also have a deregulat tree agenda. And what
we need is we need banks and other market participants
to be able to fully access the market and to
intermediate and keep them liquid in the treasury market.
Speaker 3 (51:40):
And I think SLR reform is part of that equation.
Speaker 11 (51:43):
Is that liquidity there right now? And I specifically go
back to the start of April when you had the
big sell off in financial market, which a lot of
people speculate was tied to a potential gum up and
what was going on in thic Syncome specifically with treasuries.
Speaker 3 (51:57):
I wouldn't say there was a gum up.
Speaker 12 (51:59):
The infrastructure working fine, the rails were in good shape.
What there was was a lack of buyers and we
had a reduced liquidity in the market for sure.
Speaker 11 (52:09):
And that's not the same as I don't want to
get into semantics, but isn't that the gum up?
Speaker 3 (52:13):
If the buyers aren't there then what I think they're
two different things.
Speaker 12 (52:16):
One is is there an actual good operation in the market.
Speaker 3 (52:20):
Are things functioning properly? If you do a big trade,
will it settle? Will it flow through?
Speaker 12 (52:25):
We've had problems in the past in the markets, so
that hasn't been true. We didn't have any of those
issues this time. This is a question of buyers and
sellers coming together in the marketplace and was there enough liquidity?
Speaker 3 (52:35):
And it was down a lot.
Speaker 12 (52:37):
But that's where I think things like SLR reform can
be helpful because.
Speaker 3 (52:41):
We want intermediaries to play a role.
Speaker 12 (52:43):
Banks have to play an important role in the treasury market.
They used to but they've been moved out of the
treasury market by rules like the SLR, and we're certainly
actively in favor of thinking about that leverage ratio reform
as the regulators are now talking about it now.
Speaker 3 (52:58):
The problem we brought up was the deficit.
Speaker 13 (53:00):
Realistically, another part of the agenda here for the White
House is the tax reform as well. If you do
see some of the President's measures get passed, do you
have faith that the deficit has any chance of being
anything closer to being closed.
Speaker 12 (53:15):
Well, it's going to be important that ultimately happened. Seven
percent is not a long term, tenable situation to have
as a gap, and so we need to see either
on the tax side or on of course, the growth
of the economy side.
Speaker 3 (53:28):
If you have a bigger economy, you can.
Speaker 12 (53:30):
Actually collect more taxes even if taxes are the same
level or reduced, and so we want the economy to grow.
Speaker 3 (53:36):
Growth enables everything else. All right, Robin, we have to
leave it there. I really appreciate you taking time.
Speaker 11 (53:42):
We're going to check out your panel a little bit later,
live from the milkne stage. Robin Vince, the CEO of
BNY Caroline.
Speaker 2 (53:49):
Great Interview Shnani Besac Remain ball stick.
Speaker 3 (53:51):
This is pretty big tech
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:34):
Live from New York and Caroline Hyde and this is
Bloomberg Technology coming up markets. They are on edge as
trade concerns holt the four day winning street for tech stocks.
This as President Trump announces plans to impose one hundred
percent tariffs of films produced overseas, slamming media companies and Microsoft,
surpassing Apple becoming the largest US company by market value.
(00:56):
And in just a few minutes, Treasury Secretary Scott best
And will be speaking from the Milking Conference in Los Angeles.
Speaker 3 (01:03):
We'll bring you that.
Speaker 2 (01:03):
Conversation live as it gets underway. The President Trump is
taking aim at the movie industry and announcing plans to
impose check this out, one hundred percent tariff on films
produced overseas. Now is all in a post on truth
social adding quote, we want movies made in America again.
Bloommeg's Tyler Kennell joins us Now for more details and
in fact, movie moguls in the industry went to the
(01:25):
President saying we want movies made in the US with
tax credits, he proposes something very different.
Speaker 4 (01:31):
Yeah, hey, Caroline. While President Trump has often taken the
stick verse cared approach, saying no to those subsidies and
incentives instead of yes to his tariff plans. As you
alluded to there, Bloomberg News reporting that John Voight and
his agent met with President Trump at Mara a Lago
over the weekend and asked him to put forward some
tax excentives, including expanding a current tax credit that would
help boost production in the US. But there's still now
(01:54):
that he is pursuing this tariff route. There's a lot
of big questions here, including how will a movie actually
be valued for tariff purposes. Movies are, of course, more
of a service instead of a good. Not to mention
that one film could be produced in multiple locations. Does
this extend to foreign based production companies or US based
production companies that make their movies overseas. What we do
(02:15):
know is that President Trump has indicated that he would
invoke these tariffs on the basis of national security concerns.
Speaker 3 (02:21):
That signals two things for US.
Speaker 4 (02:22):
One, that's likely the justification that this White House will
take Whether or not that means they're going to evoke
IIBA or Section two thirty two really remains to be seen.
Since we haven't actually seen an executive order putting these
into motion. We do know that the USTR and Commerce
Department are working on looking into this, and the second
thing it indicates is that these tariffs would likely face
some heavy legal scrutiny if they are put into effect.
(02:45):
As you mentioned, the music the movie industry was caught
pretty off guard by the announcement.
Speaker 2 (02:50):
I mean, we're seeing sir an analysts saying this would
just reap devastation upon the US entertainment industry tailer. More broadly,
costs would rise the many, but remind us of perhaps
what the anxiety has been why other countries US outside
the US. We think the UK, we think Canada have
managed to pull away a lot of US production.
Speaker 4 (03:11):
Right, and that really does have to do with the
tax incentives and lower labor costs as well as production costs.
Speaker 5 (03:16):
And the Most Picture.
Speaker 4 (03:17):
Association does say that employees about two point three two
million people in the US in this industry alone, but
actually pulled some other statistic for you, which is that
US spending on film and TV production fell twenty eight
percent between twenty twenty one and twenty twenty four, according
to data from research firm fraud Pro and its countries
that you're talking about, like Australia, New Zealand, the UK,
(03:39):
also Canada that have really pulled ahead when it comes
to lessening these higher costs in order to make movies,
and quickly, I will just throw one other country in there,
because this isn't the first time that we've seen movies
come into this trade war of calculation and talk. It's
China actually not necessarily that they've been taking US production,
but of course, as you well know, last month they
(04:00):
did say that they were going to restrict US of
Film's access to their market. So it's kind of continuing
how we're seeing these tariffs really go beyond just what
we traditionally think about.
Speaker 2 (04:10):
Certainly, Tyler Kendall, with all the latest from the White House,
we thank you. Now let's get more market reaction, not
just media entertainment stocks, but more broadly. Daniel Morgan's with
us senior portfolio manager that's the Nervous Trust Company, and Daniel,
you focus mainly on the Magnificent seven, big tech and
chips more broadly rather than media names. But it does
feel that once again tariffs are the eye of the storm.
Speaker 6 (04:32):
Yeah, so, Caroline, I mean it keeps extending to different groups.
I mean, obviously it's going to affect a company like Netflix,
which is kind of used to be in the talk
of those saying magnificent seven. But again, you know, Caroline,
if you look at the tariffs in terms of all
these different industry groups, it seems like technology is the
hardest hit. Even though there's a reprieve on PCs and smartphones,
(04:54):
you don't know if that reprieve is going to be
lifted up. And chips another sector that is obviously heavily
impacted by tariffs. So that's really been the you know,
black cloud over the group that's kind of kept it
from rebounding like the S and P five hundred has.
It's still a down about fifteen to sixteen percent off
mid February highs, where the SMP is only off about
(05:17):
maybe eight to ten percent. So it's a tough, tough sector,
not only media and movies, but also in the tech sector.
Speaker 2 (05:25):
That's going into individual names, Daniel, because of course we
just talked about how Apple has switched places with Microsoft,
it's no longer the most valuable company on the SMP
for example, we seem to see hardware hit the hardest
at the moment. Is Apple just one that you cannot
rebuy into until as a future catalyst, Carolin.
Speaker 6 (05:43):
Apple's a tough stock because before the teriffs even came out,
there were a lot of concerns that there would be
a delay in users upgrading to the new iPhones because
they didn't have the same AI serie personal assistant technology
that everybody was hoping for that would be unveiled. Looks
like it's going to go into the iPhone seventeen that's
(06:04):
not coming out to the fall. If you look at
the most recent quarter, even though there were no direct
tariffs at the time, I mean, iPhone revenues were only
up about two percent.
Speaker 3 (06:14):
So they are in a really.
Speaker 6 (06:16):
Difficult position caring because they are so heavily entrenched in
the Pacific Rim, not just China, but through all their
supply chains and manufacturing. They do about fifteen percent in India,
but for them to move that out of that part
of the world is going to be very challenging.
Speaker 5 (06:31):
So they have a very tough road.
Speaker 6 (06:34):
To go, and there were factors and headwinds that were
up against them even before the whole tariff news.
Speaker 2 (06:40):
And Daniel, we actually at least got some sort of
admission of a lack of clarity from executives, and we
got some feeling for fundamentals in earnings. We've still got
earnings to come. I know you've been thinking about what
AMD is going to give us. Tonight, we get pal
Andeer and it's been a real winner over the last
year or so. But even software feels a little bit
of pressure today. You look for in some of these
(07:01):
earning still left.
Speaker 6 (07:03):
Well, Palantar is a whole different game, Carolin, because they're
in the defense industry, but they're a tech sector. But
you know, looking into let's say advanced market Devices, which
reports on Tuesday, we know that Intel, when they reported
two weeks ago their data center group revenues were up
ten percent. Will get another window into data center revenues.
Speaker 2 (07:22):
I'm afraid, Daniel, I'm going to have to leave it
there for a moment, so kind of you to join us,
but we have to go over to the Milken Conference
in Los Angeles. Treasury Sectory Scott Besson has started speaking seventies.
Speaker 7 (07:33):
He had the rare combination of guts and intellect to
defy the Wall Street consensus. With his heterodox approach to
junk bonds, he pioneered a new asset class known today
as high yield bonds. By staying true to his vision,
Mike overturned decades of economic orthodoxy. He bootstrapped entirely new
(07:56):
industries by redirecting billions of dollars in cap to non
investment grade companies.
Speaker 5 (08:03):
His colleagues on Wall Street told.
Speaker 7 (08:05):
Him he was delusional and a fool, but ultimately history
proved him right.
Speaker 5 (08:11):
Sound familiar like Mike Milkan.
Speaker 7 (08:14):
President Trump has no shortage of critics in establishment circles,
but he proved them wrong in his first term, and
he is proving them wrong again today. On President Trump's
first day in office, he vowed to usher in a
new golden age for our country, a golden age. America
deserve a golden age. America deserves a golden age economy.
(08:40):
So for the past one hundred days, we've been preparing
the soil. We have uprooted government waste and harmful regulations.
We have planted the seeds of private investment, and we
have fertilized the ground with fresh tax legislation. Next, we harvest,
and we want you to harvest with us. America is
(09:01):
the showing point of global finance. We have the world's
reserve currency, and the deepest and most liquid capital markets,
and the strongest property rights. For these reasons, the United
States is the premier destination for international capital, and the
administration's goal is to make it even more appealing for
(09:22):
investors like you. This morning, I will explain how we
plan to achieve that goal. The primary components of the
Trump economic agenda, trade, tax cuts, and deregulation, are not
standalone policies. They are interlocking parts of an engine designed
to drive long term investment in the American economy. Our
(09:46):
goal with trade policy is to level the playing field
for our great American workers and companies. With a level
playing field, American industry can out compete all challengers, tariffs
or engineer to encourage companies like yours to invest directly
in the United States. Hire your workers here, build your
(10:08):
factories here, make your products here.
Speaker 5 (10:11):
You'll be glad you did, not only because we have the.
Speaker 7 (10:14):
Most productive work force in the world, but because we
will soon have the most favorable tax and regulatory environment
as well. This is where tax incentives and deregulation come
into play. You may have heard one big, beautiful bill
floating around Congress. This bill is big and beautiful for
(10:35):
Main Street America and investors alike. The President's signature tax
legislation will prevent an enormous tax hike on Main Street
by making the small business deduction permanent. It will also
provide tax credits and deductions for research and innovation to
stimulate investment in high tech operations. It will restore one
(11:00):
hundred percent expensing for equipment while expanding that incentive to
new factory construction. The objective to accelerate investment in American industry.
To make that investment as seamless and rewarding as possible,
President Trump has embraced an ambitious deregulation agenda. This includes
(11:23):
expansive permitting reform. The President doesn't want to just drill,
baby drill, He wants to build, baby build.
Speaker 5 (11:31):
To that end, he.
Speaker 7 (11:32):
Has signed executive orders to reduce the federal approval process
for new energy and construction projects from several years to
just a few months. This simple reform will unleash the
creative potential of America's builders. It will empower business leaders
like you to put your capital to work as quickly
(11:54):
and efficiently as possible. The building renaissance will be fueled
by the President's Energy Dominates agenda. Energy is the base
layer of all economic activity.
Speaker 5 (12:06):
That's why the.
Speaker 7 (12:07):
Administration champions and all of the above approach to energy
development to drive down the cost of doing business. I
hope you can see the bigger picture now. The Trump
economic agenda is more than the sum of its parts. Trade,
tax cuts, and deregulation may be three distinct policies, but
(12:29):
each policy is mutually reinforcing and acting in concert. They
push toward the same goal to solidify our position as
the home.
Speaker 5 (12:39):
Of global capital. The result of.
Speaker 7 (12:42):
The President's economic plan will be more more jobs, more homes,
more growth, more factories, more critical manufacturing plans, more semiconductors,
more energy, more opportunity, more defense, more economic security, more innovation.
In short, more of all things we need the most.
(13:05):
The President believes we can achieve more together. This is
the abundant vision he has for the future. He wants
everyone to be a part of it.
Speaker 5 (13:15):
Thousands of businesses are now catching the President's vision.
Speaker 7 (13:19):
Since he assumed office in January companies have pledged to
invest trillions into the US economy. President Trump has secured
more investment for our country in one hundred days than
President Biden did during all four years. Entrepreneurs, too, are
starting to understand what the President is.
Speaker 5 (13:39):
Trying to accomplish.
Speaker 7 (13:41):
Mart sold one of the highest levels ever recorded for
new business applications. Many of these men and women, like
many of you, are grasping that America First is a
blueprint for.
Speaker 5 (13:52):
More abundant world for now. A parting thought.
Speaker 7 (13:57):
When I entered public service, I spent more than forty
years in the asset management business. There one mantra guides
one of the world's most successful investors. Never bet against America.
Warren Buffett coined the phrase, and it's been his load
star as long as he's been in the game. Never
bet against America captures a time tested truth. The American
(14:22):
economy is unstoppable. Throw whatever you will at our capital markets,
the Great Depression, two World Wars nine to eleven, a
COVID recession.
Speaker 5 (14:33):
Of the last few years, or sky high inflation.
Speaker 7 (14:37):
Each time the American economy gets knocked down, it gets
back up again, and it gets back up even stronger
than it was before US markets are anti fragile. Indeed,
the entire history can be distilled into just five words
up and to the right. On a long term horizon,
(14:59):
it's it's never a bad time to invest in America,
but especially now. The United States is entering a new
golden age of economic prosperity for both Main Street and
Wall Street. And we don't want anyone to get left behind.
Come with us so we can build a more abundant
America together.
Speaker 3 (15:17):
Thank you all, Please welcome Institute Chairman Michael Milkin.
Speaker 8 (15:37):
So, as a scholar in college, a leading university, an
accomplished fund manager, former professor, and distinguished career in finance
and academic, your range of life options was unlimited. What
inspired you to choose the field of public service? Joining
(16:02):
President Trump's administration in a very high profile and I
should say high pressure role.
Speaker 5 (16:11):
I would agree on all the above.
Speaker 7 (16:15):
So, Mike, there was a long, long art desire for
public service. I had tried or considered going to the
Naval Academy, and I was applying in nineteen seventy nine.
Speaker 5 (16:26):
I wanted to serve my country.
Speaker 7 (16:28):
Due to central orientation, I was unable to so, even
since I was a teenager. I wanted to serve my country,
and I'd had a great career like many people in
this room and finance, the country had been good to me,
and as an economic history scholar, I was shocked at
(16:49):
what was happening with these budget deficits. So last year
six point seven percent of GDP highest ever when.
Speaker 5 (16:58):
We weren't at war, weren't in.
Speaker 7 (17:00):
A recession, and I wanted to come out from behind
my desk and be part of the solution because I
was afraid the four more years of that, and it
was kind of a deeply cynical plan.
Speaker 5 (17:13):
I thought, run up the.
Speaker 7 (17:14):
Debt and then have to raise taxes and really buy
me the American engine of growth, innovation, and opportunity.
Speaker 8 (17:23):
Well, we once again were very happy you took up
that mission. And I can't think of a better person
at this time to be the Secretary of the Treasury.
Speaker 5 (17:35):
Let me try.
Speaker 8 (17:40):
Over the years, we've had a number of Secretary's Treasuries
that were not really into financial markets, and so you're
the right person at the right time. But it's interesting
when I think about it, and how do you strike
the balance between the administration's goal of reindustrialization in the
(18:03):
US and the risk of isolating the US economy.
Speaker 7 (18:08):
Well, I think that they're not mutually exclusive. And as
I've said many times that obviously in this trade puzzle,
China's the biggest piece.
Speaker 5 (18:22):
Where do we end up with China?
Speaker 7 (18:24):
And I said during IMF week in Washington, said, you know,
it's possible that we could, as Ray Dalio might say,
do a big, beautiful rebalancing that if we want more manufacturing,
everyone agrees except Chinese leadership, that they need more consumption,
we could actually do that together. And then look on
(18:47):
the other side that getting better terms of trade is
not always a right line.
Speaker 5 (18:55):
It's not always a pleasant process.
Speaker 7 (18:57):
But I think at the end, the trading relationships will
be stronger, our security and values ties will still be there.
Speaker 5 (19:09):
I look back and I.
Speaker 7 (19:10):
Think about the example of NATO and German fiscal spending.
So I lived in London for a long time, rand
the Soro's office there, and since the well forever actually
the whether it's a French president, the Italian Prime minister,
people in Brussels were trying to break open the German piggybank,
(19:35):
and President Trump not in a straight line, not in
what would be what anyone would call a diplomatic manner
has gotten NATO countries to step up and meet their
spending requirements. I think these numbers are approximate, but I
think only twenty five percent. When he came in in
(19:56):
twenty seventeen, only twenty five percent of NATO country we're
meeting their spinning requirements. Now I think only twenty five
percent aren't. So the Germans for the first time are
going to allegedly do a big fiscal spin which will
drive European growth, And so can we do the same
thing on trade?
Speaker 5 (20:17):
I think so.
Speaker 8 (20:18):
So let's talk maybe about a specific situation. You recently
sign an historic economic partnership with Ukraine, and as you said,
there was a little few bumps along the way. Can
you walk us through the role that the Treasury played
and what is expected to come out of this agreement?
Speaker 5 (20:42):
And let's hold backwards that. I was amused, gratified.
Speaker 7 (20:52):
To see that on Saturday as I was coming out here. Friday,
as I was coming out here, Washington Post lead headline
was Russia now nervous after US Ukraine signed deal, and
that I believe that this would happen in February. President
(21:15):
Trump believed that it would happen in February. And this
was President Trump's idea. He likes negotiating, as you know
a lot of people in this room probably know, and
he likes creating negotiating leverage for himself and the Ukraine
Investment partnership. The economic partnership was his idea, and he
(21:36):
believed that it would do several things. One, it would
create more leverage for him with the Russian leadership when
it was time to go to them. So the idea
was start with Ukraine, sign a deal that shows that
there is no daylight between the US and the Ukrainian people.
(21:58):
It would be a symbol to Ukrainian people that the
US is still there. It would be a symbol to
a tired American public, skeptical of more financial commitments, that
it was possible to have a shared prosperity with Ukraine.
And then it would in essence be a tacit security
(22:21):
guarantee because of the economic partnership. I went to and
just to give you the timeline. So he tests me
with throwing up the document speaking with Ukrainians. I thought
it was a good idea to actually go to Kiev.
For anyone who hasn't been you fly to Poland, you
(22:43):
take a ten hour night train the end of Kiev,
and you do that to keep from the getting shot down,
and which good And everyone was saying, oh, look, this isn't.
Speaker 5 (22:57):
A good deal. This isn't a good deal. And I said, well,
if it's.
Speaker 7 (23:00):
Not a good deal, why did the Russians bomb Kiev
for the first time? So I went on February tenth,
the Russians bomb Kiev at four in the morning for
an hour for the first time since November because they
knew the train arrived at eight and so before I
(23:20):
got there. So if the Russians, if we were pro
Russian and this was a terrible deal for the Ukrainians,
why didn't the Russians want it signed?
Speaker 5 (23:29):
So then.
Speaker 7 (23:32):
President Zelenski elected not to sign it that day. He
elected not to sign it. At the Munich Security Conference
a few days later, there was a little incident at
the White House. Some of you may have seen. President
Trump called it great TV and when the deal went
south that day. And I actually think in terms of
(23:54):
the final deal, and I'm sure you everyone in this
room has seen it that sometimes the blow up, you
end up with a better deal. So February twenty eighth
was the blow up in the Oval, and what was
going to be signed that day was actually just.
Speaker 5 (24:09):
A four page memorandum of understanding.
Speaker 7 (24:12):
After that blow up, Treasury made the decision to try
to make the blow up into an opportunity and my team.
I instructed my team to go straight to writing the
full agreement, which is six different agreements, varying lengths, but
(24:32):
hundreds of pages. So we worked on that document, and
then when there was the recovery and trust between President
Trump president Zelenski after the meeting at the Vatican, we
signed the deal a few days later. And look, I
think it's win when what it is not is one
(24:53):
of these rapacious Chinese deals.
Speaker 5 (24:55):
Sign here, it's a loan to own.
Speaker 7 (24:58):
You're going to default on the debt. We're going to
own all your minerals, and that's life. This is economic partnership.
They put in assets, we put in capital from the DFC,
American best practices and know how.
Speaker 5 (25:12):
And it's fifty to fifty. It's equity, not debt.
Speaker 7 (25:16):
And some of our European partners were criticizing me at
the G seven and I said, you know, you know, guys,
if you want to tray if you want to do
a debt for equity swap, why don't you write off
your Ukraine debt and we'll let you into our partnership.
Speaker 5 (25:31):
No one's called me yet.
Speaker 8 (25:33):
Well, you know, I think what struck me, mister Segrete
was this major oil fine off Guiana and Venezuela rattling
the sabers, and had sent a couple military ships. The
US then asked them what you're doing because that's Exxon
(25:55):
that's a US company. And I think that to me
underlined part of the strength of this agreement.
Speaker 5 (26:01):
You struck.
Speaker 8 (26:03):
Let's talk about one element that many people have been
concerned about, and that is what are the key components
of deregulation. I know it's part of your economic strategy
to spur growth. Are there any specific regulations that are
at the top of your list for reform.
Speaker 5 (26:25):
Yes.
Speaker 7 (26:25):
As I said one of the smaller group meetings last night,
maybe a few people in the room interested in private credit,
and Treasury is taking the lead on financial deregulation, and
I think private credit is an incredible new the bolt
on to the world's deepest the breadth and death of
(26:49):
the world's deepest capital markets, but the growth of private
Credit tells me that the regulated banking system has been
too tightly constrained.
Speaker 5 (26:59):
So we have set up a treasury.
Speaker 7 (27:04):
I convened something called FSOC Financial Stability Oversight Council, and
President Trump tasks me with helping him choose the leaders
for the financial regulators. So they have installed a new
vice chair for Supervision at the FED, Mickey Bowen.
Speaker 5 (27:22):
We are going to have a new.
Speaker 7 (27:24):
OCC head FDIC, Paul Atkins has just taken over the SEC.
Brian Quinn is at CFTC. So the regulators are aligned
and we are going to be like safe, sound and
smart and redoing regulated financial entities.
Speaker 5 (27:45):
And then, as I mentioned in my.
Speaker 7 (27:47):
Talk energy, that's a pretty easy playbook. But the real
impetus is going to be on permitting across all industries.
And that's where the EP comes in, putting pressure on
state and regular The federal government's going to put pressure
on state and local governments to speed up the process,
(28:10):
the permitting process. So what's the use in giving one
year depreciation if it's thirty six months to break ground.
One CEO recently told me he was talking about the
difference between doing business in Texas and Illinois. He said,
we started a project in Texas. From the day we
(28:33):
went to the city of Houston to talk about it
to the day I cut the ribbon took two and
a half years.
Speaker 5 (28:40):
In Chicago, we.
Speaker 7 (28:42):
Are still seven years into the planning process, so we
want to make everyone look more like Texas.
Speaker 8 (28:48):
Well, you have you're in an area here called Malibu
where maybe in fifteen years you can build a house.
So we are very accussed them to this. Let me
talk about another issue. It was in twenty seventeen that
our theme of the Global Conference was building meaningful lives.
(29:12):
Part of that was a reflection on the disruptions we
saw emerging from advances in AI, robotics, digital assets. The
world we felt was heading for significant change, and we
scheduled dozens of sessions around that area. Eight years later,
(29:33):
you're now the Treasury Secretary navigating the nation through these
various changes. Give us a broad view as to how
you see these issues today.
Speaker 7 (29:45):
Well, I said in my confirmation hearing that we have
to win in AI and quantum that if the United
States doesn't take the lead, if we don't win, everything
else doesn't matter.
Speaker 5 (30:00):
If we lose the and I think.
Speaker 7 (30:05):
China's catching up, which is natural, but I think we
will maintain.
Speaker 5 (30:11):
Our leadership on that.
Speaker 7 (30:13):
And again, what we are trying to do is not
pick winners and losers.
Speaker 5 (30:18):
We are just.
Speaker 7 (30:19):
Trying to set the environment for the best opportunity for
our entrepreneurs to succeed. Stop intellectual property theft, and in
terms of making it accessible to all Americans, I think
that's going to be very important.
Speaker 5 (30:39):
I was out on the campaign.
Speaker 7 (30:40):
Trail with President Trump and I was struck by there
had been a big migration by the venture capital community
President Trump. It so on one side, you've got the vcs,
the most innovative the people in the world. You got
Elon Musk, the richest in the world, and the presence.
(31:02):
Penultimate rally that I went to was in Pittsburgh, and
the steel workers showed up and they got their best on.
They've got their hard hats, they've got their families. And
the real idea is to make sure that innovators can
innovate and steel workers can have the same quality of
life and opportunity, and that their kids could be the
(31:27):
Silicon could be the Silicon Valley entrepreneurs, or they can
stay and have the same life or better that their
folks had.
Speaker 5 (31:36):
In Pittsburgh.
Speaker 8 (31:37):
Well, that is a great goal and we hope we
achieved it. From that standpoint, interest rates, you know, you've
often talked how important that ten year interest rate level is,
and I when I look at financial markets over a
long period of times, I can sometimes identify when that
(31:59):
end vigil had come into financial markets, by what period
of time, and the interest rates. So in the nineteen seventies,
particularly the volatility of financial markets, you saw over the
next decade many of the people that were CFOs became
CEOs because how you financed your company allowed it to exist.
(32:23):
In the last few years, we've lost three as independent
companies major financial institutions due to the fact that they
had bought a quarter of a trillion of US government
intermediate securities and borrowed overnight. So when you look at
interest rates in the tenure, and as I mentioned to you,
I got this app on my phone that anytime the
(32:47):
US government's prices changed by more than two percent in
two hours, off my phone goes.
Speaker 3 (32:55):
So in the nineteen.
Speaker 5 (32:57):
Fifties, please don't share that with the president.
Speaker 8 (33:02):
So in the nineteen fifties, if you were trading governments,
it was like watching pain dry. You could see an
entire variation of maybe two percent in price in an
entire decade. We now have seen a variation of more
than two percent, occurring more than one day. How do
(33:23):
you see the importance of the level of interest rates
in our economy and what you want to achieve.
Speaker 7 (33:31):
I think that I'm not going to talk about the FED.
I said, I won't talk about their future mistakes. I'll
only talk about their past mistakes. So I thought it
was focused. I thought it was important to focus on
the tenure. And the tenure has a lot of things
(33:54):
wrapped in it. It's the short term rates, it's the
term premium, and we're focused on creating the best environment
for stable rates. And I think a lot of what
we saw in April was this periodic unwinding that I've experienced,
(34:16):
you've experienced, most people in this room have experienced in
their career. I'm a big believer in the Hyman Minsky
stability leads to instability. So I think we probably had
a very stable period. A lot of leverage players built
up very large positions. There was an uncertainty shock they're out.
(34:40):
But what we're trying to do is to create go
back to the from one point zero non inflationary growth.
So I think if we can put non inflationary growth
in place, and take back to your initial question, why
am I sitting here, is to take away the credit
risk of the US government, then I think rates will
(35:02):
naturally come down. And as I've said before, there's an
opportunity here that.
Speaker 5 (35:08):
If we can do it.
Speaker 7 (35:09):
The goal on one side, I call it reprivatizing the
government or reprivatizing the US economy. On one side, we
want to bring down government borrowing slowly, maybe decrease the
deficit by one percent a year, so time President Trump
leaves office, we're back at the long term average of
about three and a half percent deficit to GDP, and
(35:31):
the denominator grows faster than the numerator debt to GDP
goes down, So we're decreasing the government in the economy
at the same time we are right sizing government spending and.
Speaker 5 (35:49):
Government employment.
Speaker 7 (35:50):
And then on the other side, through financial deregulation, we're
releveraging the private sector, and then the excess employment that
was shed in the government economy can go to the
private sector. One thing I've never lived in DC before,
but one thing that really struck me was within a
ten mile radius of DC. Twenty five percent of the
(36:15):
nation's economy pulses through there, and that's too much. Traditionally
it's about twenty one percent, and we've got to make
sure we have a stewardship obligation to make sure that
that is spent wisely.
Speaker 8 (36:31):
So we were making decision where to have the Milking
Institute School of Public Health. Besides the fact the executive
office building is one block away from GW, but every
major decision on medical was located within a mile or so.
And so the decision, ultimately, with the talent we had there,
(36:53):
with Lynn Goldman and others, is we would go to
GW because the decisions were being made there.
Speaker 5 (37:00):
As you know, we spend.
Speaker 8 (37:02):
Twelve years building this building across the street from your
new home and the Treasury and the Center for the
American Dream, and we thought it was a four year project.
Speaker 5 (37:13):
It turned out to be a twelve year project.
Speaker 8 (37:18):
But this passion for the ideal of American Dream, I
believe is something you truly believe in. We've been asking
ten thousand individuals in more than one hundred countries around
the world that live there or have come here how
they interpret that phrase. What does that mean? What does
(37:41):
the American dream that you're going to protect for so
many of us?
Speaker 5 (37:44):
What does it mean to you?
Speaker 7 (37:48):
It means a shared vision. We're going to approach the
two hundred and fiftieth anniversary next year, or we will
have the two hundred and fiftieth anniversary next year, and it's.
Speaker 5 (37:59):
What what does the next two point fifty look like?
Speaker 7 (38:02):
And to me, it's the equal opportunity for great outcomes.
Speaker 5 (38:09):
It's like I.
Speaker 7 (38:11):
Said, it's equal opportunity if you're one of the children
of the construction workers in the Ducaine Arena on November fourth,
that you might be sitting here because you founded a
financial services company, or because you're a medical researcher, or
it's the opportunity for people in this room to continue
(38:33):
to prosper.
Speaker 5 (38:35):
But to me, it's two things.
Speaker 7 (38:38):
It is the fact that the system works and that
there is mobility, that we get rid of these discouraging
surveys of families that and children who don't think they're going.
Speaker 5 (38:52):
To do as well as their parents.
Speaker 7 (38:54):
So we need a belief in the system and we
need to canue making sure that the system works.
Speaker 5 (39:02):
So to me, that's the American Dream.
Speaker 8 (39:04):
Well you've wrapped that up in in a bow for
us here, and that what we have found in every
survey for twelve years is the number one essential agreement
condition that exists for the American dream was freedom to
live your life, whether you wanted to be a steel worker,
(39:25):
or whether you wanted to work in finance or wherever
you wanted to pursue, or whether you wanted to be
the soccer coach of your daughter's soccer team. So, mister Secretary,
we couldn't be happier that you've took up the mantle
of public service and we look forward.
Speaker 5 (39:42):
To your stewardship for the next few years. Thank you
very much.
Speaker 2 (39:45):
Thick you you were listening to US Treasury Secretary Scott
Lessont of course with Michael Milkin at the Milking conference
over in Los Angeles, just tying up some of the
statements that were made more broad by the Treasury Secretary
talking about how the United States is anti fragile in
(40:05):
particularly they dwelt upon the ten uere important to focus
on the tenure Treasury and has lots of components to it.
He's saying they're trying to create the best environment for
stable rates. They want to go back to Trump one point, oh,
non inflationary growth for the US economy, take credit risk
out of government debt and bonds. More broadly, rates can drop,
he thinks, and there's too much of the US economy
(40:26):
pulsing around Washington, DC in particular, talked about his view
on the American Dream, but also a little hint at
what means for security more broadly, talking about the US
Ukraine deal being a win win, wanting for the banking
sector that stability, but talking about the system being too
tightly constrained, too overregulated. And then to technology return and
(40:47):
he said that the US must win on AI and quantum,
but the China is indeed catching up. Let's check in
on these markets post the Treasury Secretaries comments, we're still
down five tens percent off youelng in then, as that
one hundred have been trading around this range throughout the day.
This is more a symptom of what's happening in grander
scheme of Macro worried about trade tariff concerns, particularly focused
(41:07):
on the world of Hollywood right now, where indeed the
milking conferences upon us move on and have a look
what's opening Crypto has been a risk asset that's been
selling off as well. Bitcoined down by about two percent.
We're at ninety eight hundred and fifty three, just showing
that risk off attitude. But the individual socks that we
want to keep an eye on because look, you are
seeing pressure throughout the tech sector today, Netflix in the
(41:28):
eye the stormers were worried about the movie industry and
about content being produced. A BroadWare down by one point
six percent. Dig into that in a moment. We still
got earnings this week. Think AMD on Tuesday. Palenteer comes
after the bell tonight for down three tenths of percent.
Remember this stock has been on a tear up more
than sixty percent so far this year. Software has won
out and even when they're really focused on the defense sector.
Apple off by more than three percent. It is no
(41:50):
longer the most valuable company in the United States on
the S and P five hundred. It's been supplanted by Microsoft.
We're in so many problems for Apple right now post
their earnings. Let's think into it. Because Bluemg's Mark German
is standing by he too in LA But Mark, in
this week's power On newsletter, you write that Apple faces
like a make or break moment, a laundry list of
once in a decade problems hitting at the same time.
(42:13):
Tariff's front and center, but so much more Mark.
Speaker 5 (42:17):
Yeah, that's right.
Speaker 9 (42:18):
I mean Apple is able to deal with a lot, right,
but right now they have I would say more than
a lot going on. They have tariffs right that could
up end product pricing, device planning, is supply chain. You
had a judge in California rule last week that Apple
must stop charging developers for in AT purchases completed outside
of the App Store. Obviously, the vast majority of revenue
(42:40):
Apple gets from the app store is in AT purchases.
That's why Apple tried to protect that twenty seven thirty
percent commission at such an extensive level. You have the
threat of losing another twenty billion dollar business.
Speaker 5 (42:53):
The search deal with Google.
Speaker 9 (42:54):
Google obviously pays Apple that much to make the Google
search engine the default provider on the Safari web browser
across all of Apple's products and services, and so that
is another lever that could potentially hurt Apple. You have
the ongoing struggles in AI, you have a developer conference
in June. You have the ongoing DOJ lawsuit you have
(43:15):
increased scrutiny happenating in the European Union, in Korea and
Japan constantly new threats of fines for a large percentage
of their local businesses. And of course the backdrop is
the company's performance in China, where a turnaround is very
much needed after it continued annual declines there.
Speaker 2 (43:32):
And we saw that in their earnings posted just last week.
Mark German. It's was always a must read. I urge
of yours to go and check out Power on thanks
to summarizing for us. I Meanwhile, let's get over to
the world of big tech, from big tech to the
big screen, because media stocks they're under pressure after President Trump,
and that's his plans to impose tear are some movies
produced overseas. Lucas Shaw standing by with more and look
(43:54):
this feels this truth social post where we learn about
a potential one hundred percent tariff has more questions than
answers for the industry right now.
Speaker 10 (44:04):
I mean, without question, a lot of people were thrown
off guard, very confused by what exactly it meant and
also what Trump's real intentions are. You know, based on
our reported we know that he spent some of The
Weekend with actor John Voyd and Voights manager Stephen Paul.
John Voyd is one of kind of Trump's ambassadors to
(44:25):
try to figure out how to bring production back to
this country. Keep in mind, there's still a lot of
production that happens in the United States, but there has
been a lot of production that has moved to places
like the UK and Canada. You know, I think they
talked about things like incentives, but Trump loves a tariff,
and so he started talking about tariff.
Speaker 2 (44:43):
Well, stick thin carrot, and so we see who most
implicated here, because Barcley's already coming out with a note
basically saying we export more than three times and we
import in terms of movie making, and you're hurting the
very industry you're trying to help.
Speaker 10 (44:57):
Yeah, the Motion Picture Association, which is the trade group
that represents all the Hollywood studios, has not said anything publicly,
but they do have reports where they showed that the
US is a net exporter, that we have a positive
trade balance with every other country. I mean, you just
think about it.
Speaker 5 (45:14):
The biggest, highest.
Speaker 10 (45:15):
Grossing movies of the year every year tend to be
US movies. You know, the most watched TV shows the
most popular streaming services. All of these are American products
for the most part. You know, in terms of the impact,
it's really hard to know without knowing how the tariffs
to be applied.
Speaker 5 (45:29):
A lot of people have.
Speaker 10 (45:29):
Asked me, like, how do you even tear iff a movie?
And I'm not sure what to tell.
Speaker 2 (45:32):
Them exactly what value is the movie at and where
exactly who finding that revenue stream to hit Lucas Shaw,
We appreciate it. I'm sure we're happing many more questions
coming away soon. Meanwhile, though, coming up, you know, musk
says Ai should be used to replace the functions currently
done by some public workers. That conversation's up next, plus
so much more for the milkn Conference. A conversation with
(45:53):
the ny CEO Robin Vince is a.
Speaker 3 (45:55):
Blue met technology.
Speaker 2 (46:08):
Let's go back to the Milking Conference now for a
conversation with bny CEO Robin Mince Romain mostictionally base as
selling by.
Speaker 11 (46:17):
Thanks Carolin and live here on the Milkin stage. The
CEO of B and Y joins us right now, Robin Vince.
Speaker 3 (46:23):
Robin, you're a man who's been traveling the world.
Speaker 11 (46:26):
You're a man with two trillion dollars in assets under management,
fifty three trillion dollars under your custody.
Speaker 3 (46:33):
What are your clients asking you right now? Yeah, well
there's a lot going on.
Speaker 12 (46:36):
So it's great, first of all, great to be with you,
Great to be here at milk And this is one
of those places where everything comes together from around the world.
As you said, I have been traveling and actually you've
just hid different things from clients in different places according
to where you are. I've been in Europe, I've been
in India, I've been in the Middle East.
Speaker 3 (46:54):
That's all over the course of the past couple.
Speaker 12 (46:56):
Of weeks, and I would say the sentiment varies a
little bit. We're having to explain.
Speaker 3 (47:01):
So, first of all, there is a signal.
Speaker 12 (47:03):
A noise problem when we talk to our clients internationally.
People can't really tell the difference between the tactics and
the strategy of what's coming out.
Speaker 3 (47:13):
You know, what's the difference between tariffs.
Speaker 12 (47:15):
And real trade policy? What does it mean on deregulation?
Why are these things happening? And so I think all
us CEOs find themselves in this perspective.
Speaker 3 (47:24):
We were joking about this earlier on, but.
Speaker 12 (47:26):
We kind of have to be a bit explainers in
chief first and foremost, so what's actually going on.
Speaker 3 (47:32):
That's what they're interested in.
Speaker 12 (47:34):
Now, within those continents there are different perspectives as well.
So in India, there was a lot of conversation about, Okay,
what are the opportunities for India, what might a trade
deal look like? How could the India benefit from the
opportunities associated with all of this? In Europe a little
bit more what on earth is going on?
Speaker 3 (47:53):
Is the US a reliable partner?
Speaker 11 (47:55):
It's one thing to be confused by what's going on
in the US, But are those clients actively or at
least specifically.
Speaker 3 (48:03):
Talking about pulling away from the US?
Speaker 12 (48:06):
Well, I think some of them are thinking about it,
and so in Europe I would say there's a little
bit more of that narrative, less so in the Middle East.
Speaker 3 (48:13):
The Middle East a recognition that they are.
Speaker 12 (48:16):
Sort of sitting in the middle of the world geographically
and also geopolitically in some cases, and so they observe
what's going on, they take some reaction to it, but
at the end of the day, they're interested in long
term relationships. In Europe, I would say there's a little
bit more of a reaction against it.
Speaker 3 (48:33):
Maybe they feel a little bit more that they've been.
Speaker 12 (48:36):
Put on the spot, and there are certainly conversations about
can they derisk now, I say de risking is a
little easier said than done.
Speaker 3 (48:44):
Sometimes there's a.
Speaker 12 (48:45):
Reason why the US capital markets are the world's greatest,
the most liquid, the dollar supremacy, the treasury is the
risk free asset the growth in the United States. It's
not so easy to just say, hey, we're out up
to the.
Speaker 13 (48:58):
Treasury market because this is where Bnymelan is a huge player.
B and Y is this massive central intermediary.
Speaker 3 (49:05):
What is the risk?
Speaker 13 (49:07):
Ultimately, it's not just the liquidity concerns we've seen in
the midst of the trade war. It is also what
we're going to see in the future as we get
closer to that X state. Do you have any concerns
around how countries around the world might view the treasure Well.
Speaker 12 (49:22):
I think we all have to be very realistic about
the fact that the treasury market is one of the
world's most important markets.
Speaker 3 (49:29):
As you said, yes, liquidity was reduced. The depths at.
Speaker 12 (49:33):
The top of the order book was down probably about
eighty percent or so at one point two or three
weeks ago.
Speaker 3 (49:41):
Now that doesn't mean.
Speaker 12 (49:42):
That the market wasn't functioning. It was working really well.
We were settling over twenty trillion dollars of treasuries a
day and it was all working, but there was it
was harder to move blocks of risk. Now it's a
complicated problem because yes, we've got the x state. Yes,
seven percent deficit is it's a significant thing.
Speaker 3 (50:01):
To be running and at some point that has to
be brought under control. That is not a long term,
tenable situation. It's got to be brought down to a
more manageable number. So people are looking at that.
Speaker 5 (50:11):
Now.
Speaker 12 (50:11):
Compounding all of that is the question of okay, do
people still have the faith in the United States and
the treasury market? And that's why I would say, of
course people are talking about it, but there are a
lot of things that underpin the US treasury markets and
the confidence, the dollar supremacy, the rule of law, the liquidity,
and it's easier said than done to pull away from
(50:32):
something like that.
Speaker 13 (50:32):
The Treasury Department has been talking about the potential to
provide relief for the banking system via the SLR, the
supplementary leverage ratio in order to make treasury markets function
more easily in times of these sources of stress.
Speaker 3 (50:48):
Do you think that's necessary?
Speaker 13 (50:49):
Does there need to be regulatory relief more immediately and
will it fix the problem?
Speaker 12 (50:54):
Well, I think it will be helpful, is the punchline
answer to your question. And Secretary Bustance been pretty clear
about this. He is a supporter of making sure that
we have the deepest, most liquid market in the world
in the treasury market to benefit the US taxpayer in
the US economy. And so the question is what are
all of the things that can be brought to bear
(51:16):
to make that true. And this is a little bit
of an extension of what the Secretary Beston and President
Trump have said in terms of the policy.
Speaker 3 (51:22):
It's a three legged stool.
Speaker 12 (51:24):
They had objective around trade, they have an objective around taxes,
and they also have a deregulat tree agenda. And what
we need is we need banks and other market participants
to be able to fully access the market and to
intermediate and keep them liquid in the treasury market.
Speaker 3 (51:40):
And I think SLR reform is part of that equation.
Speaker 11 (51:43):
Is that liquidity there right now? And I specifically go
back to the start of April when you had the
big sell off in financial market, which a lot of
people speculate was tied to a potential gum up and
what was going on in thic Syncome specifically with treasuries.
Speaker 3 (51:57):
I wouldn't say there was a gum up.
Speaker 12 (51:59):
The infrastructure working fine, the rails were in good shape.
What there was was a lack of buyers and we
had a reduced liquidity in the market for sure.
Speaker 11 (52:09):
And that's not the same as I don't want to
get into semantics, but isn't that the gum up?
Speaker 3 (52:13):
If the buyers aren't there then what I think they're
two different things.
Speaker 12 (52:16):
One is is there an actual good operation in the market.
Speaker 3 (52:20):
Are things functioning properly? If you do a big trade,
will it settle? Will it flow through?
Speaker 12 (52:25):
We've had problems in the past in the markets, so
that hasn't been true. We didn't have any of those
issues this time. This is a question of buyers and
sellers coming together in the marketplace and was there enough liquidity?
Speaker 3 (52:35):
And it was down a lot.
Speaker 12 (52:37):
But that's where I think things like SLR reform can
be helpful because.
Speaker 3 (52:41):
We want intermediaries to play a role.
Speaker 12 (52:43):
Banks have to play an important role in the treasury market.
They used to but they've been moved out of the
treasury market by rules like the SLR, and we're certainly
actively in favor of thinking about that leverage ratio reform
as the regulators are now talking about it now.
Speaker 3 (52:58):
The problem we brought up was the deficit.
Speaker 13 (53:00):
Realistically, another part of the agenda here for the White
House is the tax reform as well. If you do
see some of the President's measures get passed, do you
have faith that the deficit has any chance of being
anything closer to being closed.
Speaker 12 (53:15):
Well, it's going to be important that ultimately happened. Seven
percent is not a long term, tenable situation to have
as a gap, and so we need to see either
on the tax side or on of course, the growth
of the economy side.
Speaker 3 (53:28):
If you have a bigger economy, you can.
Speaker 12 (53:30):
Actually collect more taxes even if taxes are the same
level or reduced, and so we want the economy to grow.
Speaker 3 (53:36):
Growth enables everything else. All right, Robin, we have to
leave it there. I really appreciate you taking time.
Speaker 11 (53:42):
We're going to check out your panel a little bit later,
live from the milkne stage. Robin Vince, the CEO of
BNY Caroline.
Speaker 2 (53:49):
Great Interview Shnani Besac Remain ball stick.
Speaker 3 (53:51):
This is pretty big tech
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